Cash-for-honours verdict should usher in reform

When a serious corruption allegation is made, the police are duty-bound to investigate it thoroughly. No one could accuse Assistant Commissioner John Yates of lacking determination in his inquiry into the cash-for-honours affair.

For a while he looked like Tony Blair's personal nemesis. The dawn raids and questions under caution emboldened the Prime Minister's enemies and undermined his authority. Now cleared of wrongdoing, he might feel aggrieved that his last months in office were thus overshadowed. Downing Street aides whose reputations have been needlessly trashed are rightfully indignant. Because the 16-month-long investigation was fruitless, it now looks excessive - self-indulgent even. Such is the perspective afforded by hindsight. But Mr Yates would argue that he had little choice but to be so dogged. The alternative was to open himself to accusations of whitewash.

Mr Blair's aides always insisted they had not broken the law. They are vindicated. They also complained that muck leaking out of the investigation was smearing British politics and damaging the relationship of trust between the people and their leaders. That was less convincing. For a long time it has been understood inside Westminster that generosity to a political party increases a millionaire's chances of getting a seat in the House of Lords. As the crown prosecution service admitted last week, as long as there is no formal agreement - no signed contracts, no receipts - this understanding is not, technically speaking, illegal. But that doesn't make it a good way to staff the upper chamber of a democratic parliament. Thanks to intense police scrutiny, that ignoble tradition is now certain to fall from use.

Had Scotland Yard taken only a cursory look at the evidence and called off the search it would have created the impression that politicians are above the law. That would have been much more damaging.

For some individuals, the cash-for-honours investigation was a terrible tribulation. But for British politics in the long term it has been salutary. There is now unstoppable momentum behind moves to reform the Lords and the way that parties are funded. There will be better scrutiny of the way public appointments are made. Eventually a majority, perhaps all of the Lords, will be elected.

It also looks certain that there will be a more stringent cap on political donations, limiting the leverage that wealthy individuals can exert on policy. It is vital that politicians do not attempt to plug the gap this creates in their finances with more state funding. The point of limiting private donations (or loans on terms so favourable that they are effectively gifts) is to force parties to engage with as many people as possible, to mobilise grassroots support and recruit new members. That will happen when parties have something meaningful to say about the issues that concern voters. It will not happen if they set themselves up in competition with schools and hospitals as potential recipients of taxpayers' pounds.

But perhaps the most important lesson from the whole cash-for-honours affair is that our politics is simply not corrupt. There were plenty of journalists and politicians who wanted a scandal, who cried 'Watergate' and agitated for the unravelling of government. It didn't happen. There was never any suggestion that Mr Blair or Lord Levy were seeking personal enrichment. There were no envelopes stuffed with notes, no secret Swiss bank accounts, no smoking guns.

The government was not guilty. The police, acting independently and unhindered, had a good sniff around and found nothing. There are few countries in the world that can say the same. So for British democracy, two cheers. The third is withheld until such time as Lords appointments and party finances operate not simply within the letter of the law, but in a spirit that puts them beyond reproach.